ASA urges support of pending trade agreements

ST. LOUIS, MISSOURI, U.S. — In advance of a U.S. Senate Finance Committee hearing on March 9, U.S. Trade Representative Ambassador Ron Kirk, the American Soybean Association (ASA), along with other representatives of the U.S. food and agriculture industry, reiterated support for swift passage of the pending U.S. trade agreements with Korea, Colombia and Panama.

“These three trade agreements combined represent almost $3 billion dollars of additional agriculture exports to these trading partners,” said ASA First Vice-President Steve Wellman, a soybean producer from Syracuse, Nebraska, U.S. “These gains can only be realized by implementation of these three agreements.”

The U.S.-Korea Free Trade Agreement provides a significant opportunity for the U.S. agriculture sector. According to economic forecasts completed by the American Farm Bureau Federation, when the agreement is fully implemented, increased exports of the major grain, oilseed, fiber, fruit and vegetable and livestock products are likely to exceed $1.8 billion annually. The Korea agreement will allow the U.S. to become a competitive supplier of agricultural products to South Korea by providing duty-free and reduced tariff access. Eliminating these tariff rates through the trade agreement would be extremely beneficial to the U.S. agricultural sector.

“The agreement offers immediate duty-free access to U.S. soybeans for crushing and to U.S. soybean meal,” according to Wellman. “And for the first time, producers of U.S. food-grade soybeans would have access to the South Korean market outside of the import monopoly created by the Korean State Trading Enterprise. Tariffs on refined soybean oil would be eliminated over 5 years, and tariffs on crude soybean oil would be eliminated over 10 years.

“Domestic demand for U.S. soybean meal will also increase because this agreement is expected to generate millions of dollars of new meat and poultry exports. Domestic livestock consumed 28 million tonnes of soybean meal in 2010, using nearly 80% of all the soybean meal processed in this country.”

The U.S.-Colombia Trade Promotion Agreement eliminates tariffs on U.S. agricultural products, correcting the current tariff imbalance in agricultural trade between our countries, created in part by congressional passage and extension of the Andean Trade Preference Act (ATPA).

Elimination of Colombia’s duties in the agricultural sector would create new opportunities for American farmers and ranchers in this market, particularly relative to other suppliers that already have trade agreements with Colombia.

“Under this agreement, Colombia will immediately eliminate tariffs on soybeans and soy meal and flour,” Wellman said. “It will provide immediate duty-free access for crude soybean oil through a 31,200-tonne quota with four percent annual growth and will phase-out the out-of-quota tariff of 24% for crude soybean oil over 10 years. Colombia also will phase-out its 24% tariff for refined soybean oil over five years.”

The U.S. already has a large share of the Panamanian agricultural market that must be protected. Averaged across all agricultural products, the U.S. supplies 53% of Panamanian agricultural imports. For the commodities most important to the U.S., the share is more than 80%.

The U.S.-Panama Trade Promotion Agreement will prevent other countries, specifically other Latin and North American suppliers, from taking some of the current U.S. share of the Panamanian market. In addition, Panama has completed a trade agreement with Canada. If this agreement goes into effect before the U.S. agreement, Canadian exporters will gain a significant competitive advantage over the U.S. in the market.

“There is an urgent need for passage of these agreements,” Wellman said. “The Panama FTA would permanently lock-in duty-free treatment of U.S. exports of soybeans, soybean meal and crude soybean oil.”

These three agreements contain significant export gains for U.S. agriculture that will only be realized by passage and implementation. Conversely, inaction has proven to result in loss of U.S. market share and forfeiture of economic growth. The U.S. government’s inability to move these agreements benefits of our foreign competitors and harms U.S. agriculture.

“ASA urges that Congress and the Administration support and pass these agreements now and take full advantage of the opportunity they provide for America’s economic growth,” Wellman said.